The Hartford Announces 2007 Financial Outlook and Additional $500 Million Share Repurchase

The Hartford Financial Services Group, Inc. (NYSE: HIG), one of the nation’s largest financial services and insurance companies, announced today that it expects 2007 core earnings per diluted share to be in the range of $9.35 to $9.65. In addition, the company announced that it now expects 2006 core earnings per diluted share in the range of $8.85 to $9.00. This compares to the previously forecasted 2006 core earnings per diluted share in the range of $8.75 to $8.95. "The Hartford had an exceptional 2006 and we are expecting another very strong year in 2007,” said Ramani Ayer, chairman and chief executive officer of The Hartford. "We are well-positioned for success, with market leadership in our core businesses and the right strategies for profitable growth. By focusing on disciplined execution in everything we do, from product innovation and distribution to risk management and capital allocation, we expect to continue to generate return-on-equity in excess of 15 percent.” The company will host a conference call today at 10 a.m. to discuss its 2007 business strategies and financial outlook. A webcast of the call can be accessed at www.thehartford.com/ir. A detailed chart outlining the company’s guidance for property and casualty and life operations is set forth below. The company’s guidance reflects core earnings per share, a non-GAAP financial measure. This news release describes the company’s use of core earnings and important assumptions incorporated in this guidance. The Hartford also announced that it plans to repurchase an additional $500 million of its Common Stock under the company’s existing $1 billion share repurchase authorization. "The Hartford’s capital position is a strategic asset for the company and our first priority is to invest in the business where we can get returns at or above our targeted range. This $500 million share repurchase plan, combined with October’s announcement of a $300 million share repurchase plan and a 25 percent dividend increase, demonstrate our confidence in the company’s solid financial performance, profitable market segments and excellent capital position,” added Ayer. GUIDANCE ASSUMPTIONS The guidance contained within this news release is subject to unusual or unpredictable benefits or charges that might occur during the balance of 2006 and 2007. Historically, the company has frequently experienced unusual or unpredictable benefits and charges that were not anticipated in previously provided guidance. Among other assumptions, the guidance incorporates detailed assumptions supporting the outlook for the company as a whole and for each business segment provided in the Management’s Discussion and Analysis section in the company’s most recent Form 10-Q. During the fourth quarter, The Hartford completed a review of all assumptions underlying its estimate of future gross profits used in the determination of certain asset and liability balances, principally life deferred acquisition costs (DAC). As a result of this review and a refined estimation process, the company revised its estimate of future gross profits, commonly referred to as an unlock. This unlock will result in a $76 million, after-tax charge to net income in the fourth quarter. The impact to core earnings in the fourth quarter will be a charge of $30 million, after-tax. A summary of the unlock effects by segment is set forth below. The impact of the unlock was not included in the company’s prior guidance for 2006. Due to favorable fourth quarter results to date in both life and property and casualty, the company now expects 2006 core earnings per diluted share in the range of $8.85 to $9.00. The 2006 guidance also assumes the following items: A previously disclosed after-tax expense in the fourth quarter of $17 million related to the redemption of $500 million of the company’s 7.45 percent junior subordinated debentures due 2050 underlying the trust preferred securities issued by Hartford Capital III; The cost of resolving the previously disclosed market timing matters does not exceed the previously incurred after-tax expense of $54 million (the ultimate cost to the company of these matters could materially exceed this amount); and Diluted weighted average shares outstanding of 321 million for the fourth quarter of 2006 and 315 million for the full year 2006. The 2007 guidance assumes the following items: U.S. equity markets produce an annualized return of 9 percent (7.2 percent stock price appreciation and 1.8 percent dividends) from the S&P 500 level of 1,378 on October 31, 2006; The cost of resolving the previously disclosed market timing matters does not exceed the previously incurred after-tax expense of $54 million (the ultimate cost to the company of these matters could materially exceed this amount); A catastrophe ratio of 3 percent to 3.5 percent; A pre-tax underwriting loss of $160 million from other operations in property and casualty. In the last several years, underwriting losses in other operations have differed materially from the assumptions incorporated in guidance; and Diluted weighted average shares outstanding of 318 million. The company’s actual experience in the remainder of 2006 and in 2007 will almost certainly differ from many of the assumptions described above, due to a number of factors including, but not limited to, the risk factors set forth in the company’s Form 10-Q, significant changes in estimated future earnings on investment products caused by changes in the equity markets, DAC amortization and our effective tax rate, up and down, that are difficult to anticipate or forecast, changes in loss-cost trends in the property and casualty businesses, catastrophe losses at levels different from assumptions and developments emerging as a result of changes in estimates arising from the company’s regular review of its prior-period loss reserves for all lines of insurance, including annual grounds-up reviews of long-term latent casualty exposures, including asbestos and environmental claims and the recoverability of reinsurance for these claims. The Hartford, a Fortune 100 company, is one of the nation's largest financial services and insurance companies, with 2005 revenues of $27.1 billion. The Hartford is a leading provider of investment products, life insurance and group benefits; automobile and homeowners products; and business property and casualty insurance. International operations are located in Japan, Brazil and the United Kingdom. The Hartford's Internet address is www.thehartford.com. HIG-F The Hartford Full Year 2007 Guidance   Full Year 2007 Core Earnings Per Diluted Share of $9.35 - $9.65                       2007 Written Premium 2007  Property and Casualty   Growth Compared to 2006 Combined Ratio (1)       Ongoing Operations 3% - 6% 87.5% - 90.5%   Business Insurance 2% - 5% 88.5% - 91.5% Middle Market Flat Small Commercial 4% - 7%   Personal Lines 4% - 7% 84.5% - 87.5% Auto 3% - 6% Homeowners 7% - 10%   Specialty Commercial 3% - 6% 92.0% - 95.0%   (1) Excluding catastrophes and prior year development                     Life Sales & Deposits Net Flows ROA   U.S. Individual Annuity Individual Annuity Full Year 2007 - Variable Annuity $11.5 - $12.5 Billion ($4.5) - ($3.5) Billion 55 - 57 bps   Full Year 2007 - Fixed Annuity   $500 Million - $1.0 Billion   ($1.0) Billion - ($500) Million       Japan Annuity Japan Operations Full Year 2007 - Variable Annuity ¥530 - ¥825 Billion ¥350 - ¥650 Billion 68 - 72 bps   At ¥118/$1 exchange   $4.5 - $7.0 Billion   $3.0 - $5.5 Billion       Retail Mutual Funds Other Retail   Full Year 2007   $10.5 - $12.5 Billion   $4.0 - $5.0 Billion   13 - 15 bps   Retirement Plans   Full Year 2007   $5.5 - $6.5 Billion   $2.0 - $3.0 Billion   36 - 38 bps   Institutional Solutions Group   Full Year 2007   $5.0 - $6.0 Billion   $2.0 - $3.0 Billion   18 - 20 bps   Group Benefits (2) Fully Insured Sales $800 - $850 Million Fully Insured Premium $4.4 - $4.5 Billion Loss Ratio 72% - 74% Expense Ratio 27% - 29% After-tax Margin 7.2% - 7.6%   (2) Group Benefits guidance for sales and fully insured premiums excludes buyout premiums and premium equivalents. Group Benefits guidance on after-tax margins, loss ratios and expense ratios uses fully insured premiums and fees, but excludes buyout premiums.   Individual Life Sales $305 - $315 million Inforce Growth 8% - 10%   After-tax Margin on Total Revenue   15% - 16%         Effects of Revised Estimates of Future Gross Profits ("DAC Unlock”) On Fourth Quarter 2006 Results ($ in millions, after-tax)   Life Retail Products Group Individual Annuity (72) Other Retail -  Total Retail Products Group (72) Retirement Plans 20  Institutional Solutions Group -  Individual Life (18) Group Benefits -  International 53      Total Life core earnings[1] (17)     Corporate core earnings[2] (13)     Total core earnings (30) Add: Impact of net realized capital gains (losses) [3] (46) Net income (76)   [1]  In Life operations, estimated gross profits are used in the determination of the deferred acquisition cost asset for certain products, sales inducement assets, unearned revenue reserves and guaranteed minimum death and income benefits reserves. [2]  In HFSG Corporate, revisions to estimated gross profits affect the purchase accounting adjustments made in connection with the buyback of Hartford Life, Inc. shares in 2000. [3]  Revisions to estimated gross profits impact the DAC amortization related to realized capital gains and losses that are not included in core earnings. DISCUSSION OF NON-GAAP AND OTHER FINANCIAL MEASURES The Hartford uses non-GAAP and other financial measures in this press release to assist investors in analyzing the company’s operating performance. Because The Hartford’s calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing The Hartford’s non-GAAP and other financial measures to those of other companies. The Hartford uses the non-GAAP financial measure core earnings as an important measure of the company's operating performance. The Hartford believes that the measure core earnings provides investors with a valuable measure of the performance of the company's ongoing businesses because it reveals trends in the company’s insurance and financial services businesses that may be obscured by the net effect of certain realized capital gains and losses. Some realized capital gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to the insurance and underwriting aspects of the company’s business. Accordingly, core earnings excludes the effect of all realized gains and losses (net of tax and the effects of deferred policy acquisition costs) that tend to be highly variable from period to period based on capital market conditions. The Hartford believes, however, that some realized capital gains and losses are integrally related to the company’s insurance operations, so core earnings includes net realized gains and losses such as net periodic settlements on credit derivatives and net periodic settlements on the Japan fixed annuity cross-currency swap. These net realized gains and losses are directly related to an offsetting item included in the income statement such as net investment income. Core earnings is also used by management to assess the company’s operating performance and is one of the measures considered in determining incentive compensation for the company’s managers. Net income is the most directly comparable GAAP measure. Core earnings should not be considered as a substitute for net income and does not reflect the overall profitability of the company’s business. Therefore, The Hartford believes that it is useful for investors to evaluate both net income and core earnings when reviewing the company’s performance. Core earnings per share is calculated based on the non-GAAP financial measure core earnings. The Hartford believes that the measure core earnings per share provides investors with a valuable measure of the company’s operating performance for many of the same reasons applicable to its underlying measure, core earnings. Net income per share is the most directly comparable GAAP measure. Core earnings per share should not be considered as a substitute for net income per share and does not reflect the overall profitability of the company’s business. Therefore, The Hartford believes that it is useful for investors to evaluate both net income per share and core earnings per share when reviewing the company’s performance. The 2006 and 2007 earnings guidance presented in this release is based on the financial measure core earnings per share. Net income per share is the most directly comparable GAAP measure. A quantitative reconciliation of The Hartford’s net income per share to core earnings per share is not calculable on a forward-looking basis because it is not possible to provide a reliable forecast of realized capital gains and losses, which typically vary substantially from period to period. Some of the statements in this release should be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These include statements about The Hartford’s future results of operations. The Hartford cautions investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include, without limitation, the difficulty in predicting the company’s potential exposure for asbestos and environmental claims; the possible occurrence of terrorist attacks; the response of reinsurance companies under reinsurance contracts and the availability, pricing and adequacy of reinsurance to protect the company against losses; changes in the stock markets, interest rates or other financial markets, including the potential effect on the company’s statutory capital levels; the inability to effectively mitigate the impact of equity market volatility on the company’s financial position and results of operations arising from obligations under annuity product guarantees; the company’s potential exposure arising out of regulatory proceedings or private claims relating to incentive compensation or payments made to brokers or other producers and alleged anti-competitive conduct; the uncertain effect on the company of regulatory and market-driven changes in practices relating to the payment of incentive compensation to brokers and other producers, including changes that have been announced and those which may occur in the future; the possibility of unfavorable loss development; the incidence and severity of catastrophes, both natural and man-made; stronger than anticipated competitive activity; unfavorable judicial or legislative developments; the potential effect of domestic and foreign regulatory developments, including those which could increase the company’s business costs and required capital levels; the possibility of general economic and business conditions that are less favorable than anticipated; the company’s ability to distribute its products through distribution channels, both current and future; the uncertain effects of emerging claim and coverage issues; a downgrade in the company’s financial strength or credit ratings; the ability of the company’s subsidiaries to pay dividends to the company; the company’s ability to adequately price its property and casualty policies; the ability to recover the company’s systems and information in the event of a disaster or other unanticipated event; potential changes in Federal or State tax laws; and other risks and uncertainties discussed in The Hartford’s Quarterly Reports on Form 10-Q, 2005 Annual Report on Form 10-K and other filings The Hartford makes with the Securities and Exchange Commission. The Hartford assumes no obligation to update this release, which speaks as of the date issued.